Construction sector records worst decline since 2013 as new work dries up

Output in Britain's construction industry fell at the fastest annual pace for five years in January as a slowdown in commercial developments and house-building hit the sector hard.

Figures from the Office for National Statistics show that output fell by 3.9%, the biggest year-on-year decline since March 2013.

Monthly figures also made for grim reading, falling 3.4% between December and January, while new orders decreased by 25% in the fourth quarter.

Economists had expected a monthly decline of just 0.5%.

"Construction continues to be a weak spot in the UK economy with a big drop in commercial developments, along with a slowdown in house-building after its very strong end to last year," ONS senior statistician Ole Black said.

Investment in commercial developments, particularly in London, has fallen off a cliff since the Brexit vote as higher construction costs and uncertainty has seen developers delay new schemes.

"We doubt that house-building will recover fully soon. The prospect of further increases in interest rates is subduing buyer demand both for new and existing homes."

1.0% fall in construction output in the 3-months to January, with 'private commercial' contributing most to the fall (-4.1%). Construction fell 3.4% in the month of January, with private house building falling (-8.3%) after a strong end to 2017 https://t.co/7CnE5oFD0ypic.twitter.com/fHmZxkP680

The ONS data dump also included figures which show that Britain's industrial production rebounded in January following a boost in manufacturing and North Sea oil and gas production.

Manufacturing grew 0.1% in January month on month, representing the ninth month in a row of growth for the first time since records began in 1968 as factories benefit from strong global demand and a weak Brexit-hit pound.

Industrial production grew 1.3% in January, with growth driven mainly by the reopening of the Forties oil pipeline, which was shut down for three weeks after a crack was discovered in December.

Mining and quarrying provided the largest upward contribution, increasing by 23.5%.

"Manufacturing has recorded its ninth consecutive month of growth but with a slower start to 2018. Total production output continues to advance, bolstered in January by the Forties oil pipeline coming back on stream after December's shutdown," Mr Black added.

Figures also showed the UK trade deficit widen by £3.4 billion in goods and services to £8.7 billion, with the ONS citing rising oil prices making for more expensive fuel imports, which rocketed 21.4%.

This contributed to a £3.2 billion widening of the trade in goods deficit.